"I reserve the right to choose my own poison,"--Carl Cahill, in an October 1977 Reason magazine article describing his fight to refuse a mandatory city water hookup.
 

Libertarians point to the waste of water resources, high-cost water and sewer systems, unsafe and polluted water--and hold that these are the consequences of a tax-supported local government monopoly over water and sewer systems. Libertarians would open the way to alternatives and innovations by abolishing mandatory hookups with, and fees for, local government systems; by putting these systems on a self-sufficient footing; by abolishing the privilege of eminent domain for construction of water and sewer lines; and by improving the legal safeguards against unwanted pollution of water resources.

     Government water policy--how our water is obtained, distributed, used, and polluted--has long been criticized for a lack of integration and flexibility. More recently, observers have also challenged the traditional view that local water and sewage authorities are merely "governmentalized" versions of private businesses. Political operation systematically fosters resource waste, high cost, lax safety, and pervasive pollution.

Waste

     Waste occurs whenever a resource is devoted to uses other than those which consumers would freely choose in the market.  Ample evidence--highlighted by recent water shortages in Western states--shows that large-scale government water projects have wasted water.  Offering water sometimes as much as four-fifths free, these projects have encouraged relatively unproductive land to be brought into irrigated use,l driven more fertile farmlands out of agricultural production,2 and squandered available water resources so that whole regions lie at the mercy of drought.3  Closer to the local level, we find that the subsidization of water rates out of general tax revenues fosters similar over-consumption.  More waste results when local governments bend to political or statutory demands that they indiscriminately provide all comers with water system connections. Local water authorities' reliance upon exhortation and rationing--instead of the peak load pricing which private businesses are free to employ in times of scarcity--lets fresh water go down the drain when it is most needed and valued.
     Sewage resources are also wasted.  With subsidies blunting the incentives which sewage plant operators would feel--in the free market, that is--to try to make some money out of "waste" sludge, few municipalities do anything with sewage and sewage sludge except incinerate, bury, or dump it.  This despite the fact that technology for selling sewage sludge profitably has existed for sometime.4  Much potentially valuable sewage is never converted to fertilizer or compost material because the necessary privilege of segregating inputs of industrial heavy metals from organic sewage does not generally belong to government sewage systems.5  So the gigantic treatment plants have developed ever-bigger appetites for money and energy, but have yet to find a use for sewage.

     The combined impact of government water and sewer subsidies leads to even greater waste.  Take the household toilet as an example: for one person during one year, the five-gallon flush contaminates thirteen thousand gallons of fresh water to move 165 gallons of body wastes.6  Any system with so little efficiency would, it seems, be carefully scrutinized by private entrepreneurs--especially where fresh water is scarce.  But this is not the end of it.  Enormous flows of water--the result of local governments' subsidizing water systems--also strain the capacity of sewage plants to process sewage, lengthening the odds that sewage recovery techniques will come into use.  In sum, tax money for sewage systems subsidizes the waste of fresh water, and tax money for water systems helps assure that the sewage resource will go unused.

Excessive Cost

     Cost was once thought to be a compelling argument for government-run water and sewer systems.  Such functions were said to be a "natural monopoly," and since--according to the theory--private monopolists would raise prices without limit, the government may as well take over, run the system economically, and distribute the monopolist's profits back to the taxpayer in the form of lower rates. Libertarians recognize that this theory flunks the test of truth in several ways.  There are no such natural monopolies" on the unhampered market.  While an individual company may take advantage of inflexible consumer demands and of the difficulties faced by those who might like to get into the competition, everything ultimately has its substitutes and there always comes a point beyond which no private "monopolist" can get away with further price increases without hurting his own position.  Only governments, with their franchises and grants of exclusive privilege, create true monopoly. And that is just what a local water department or water authority is.
     The other side to the cost argument for government water and sewer systems was that the proliferation of privately operated water and sewer lines would be so wasteful and expensive that it could not possibly be superior to a single, governmental system.  But why equate "private" with "proliferation?"  If centralized systems were truly superior, they would enjoy a competitive advantage over non-centralized systems, and no government intervention would be needed to see to it that they predominate on the market.  We have already seen, too, that the freedom to segregate types of sewage can lead to more efficient use of sewage resources, and who is to say that the income resulting from this efficiency would not pay for added investments in "duplicating" sewer lines?  The cost theory as a whole flunks again when we observe that this line of argument--that private enterprise means many competing water and sewer companies--flatly contradicts the argument from monopoly.
     Finally, the advocates of the cost theory never gave any reason for expecting that a compulsory local government water and sewer monopoly, whose prices have the force of law, would pass savings through to tax- payers.  Experience with government indicates the exact opposite: that expenditures rise to meet revenues, and that revenues rise as fast as the power to tax will allow.  No private "monopoly" could possibly get away with as much.
     While government water and sewer authorities have lagged in adopting innovation, many have been observed to lavish money on new offices and expanded staffs-sometimes at the same time that rates are hiked and water shortages loom.7  And the generally ballooning bill for new water and sewer systems--due to the stagnation and lack of competition among engineers and suppliers who bid on government contracts--has been enough to "break the bank" in many smaller communities where new plants were mandated.8
     When government water and sewer system operators abandon market prices, some basis for deciding how to allocate costs and investments must still be adopted.  Even the most innocuous-looking rate structures often "happen" to redistribute costs from stronger to weaker political forces.  Straight consumption pricing spreads over an entire community the cost of building extra-large water mains needed by local industries for their special fire-fighting needs.  Similarly, line extensions or treatment plants made necessary by new industry or residential developments are often paid for out of the general rate. Some such cost-sharing may or may not take place on the free market, but when it does the customer can always say that it's part of a bargain he chose.  Not so with politically-administered water and sewer systems.

The Debate Over Water Quality

     One of the lesser-remarked effects of a governmental monopoly is the way in which it withholds, obscures, and politicizes information about the product.  Government officials in charge of local water and sewer systems, and the related technicians, engineers, and bureaucrats who work with water quality desire, like other human beings, to keep their jobs secure.  They do not "rock the boat" or raise embarrassing questions about the safety and cleanliness of water supplies and sewer system effluents unless they are forced to do so. And there are few incentives to do that. It is one thing to discuss these issues in professional seminars of water quality engineers and quite another to have to answer the tart claims made by competing water companies, as they would have to do where a government monopoly did not exist.
No such competition among water and sewer systems works today to bring the facts about water quality to light. Competition is not allowed--"mandatory hookups" with municipal systems, huge infusions of tax support for existing methods of water and waste treatment, and daunting regulation of small-scale private alternatives all discourage competition and the development of new improved methods.
     What we have in place of a free and healthy competition, and an open airing of the professional debates which would accompany free competition, is a political struggle to gain control of the tax dollars which flow to water and waste treatment.  As traditionalist defenders of politics remind us, this struggle in the political arena does work in such a way as to bring out, eventually, at least some of the true facts.  (And there these defenders rest their case.)  But why should we count ourselves as being satisfied with this outcome? What does the political struggle tell us about water and sewage systems, about chlorinated hydrocarbons and ozonation, about safety and pollution, that free competition and an open debate would not reveal even more completely?  And too--the political debates rather systematically fail to inform us about some alternatives.  The advocates of new treatment methods increasingly required by the U.S. Environmental Protection Agency as well as the entrenched defenders of older treatment technology have at least one interest in common: they both want control over the tax dollars spent on water and sewer systems.  Neither has any strong incentive to propose treatment methods which could save tax dollars or, more to the point, which could make it possible for individual families or small groups to handle water and sewage problems on a decentralized or individual basis.  Neither EPA nor the old-line engineer wants to threaten the basic premise that government should wield central power over the way the world's water and sewage resources are managed.  So the political process is not simply an alternative method for "collectively" assessing the safety risks, the costs, and the worth of various water and sewer technologies; it systematically forecloses some possibilities, raises the social costs of those which it permits to exist, and in general keeps the state of the art at a more primitive, costly level than would be the case under free and open competition.
     Unless one is a specialist in the field, one will find the water quality controversy a murky one at best.  The conflict between advocates of new and old treatment systems bears some of the outward marks of a classic confrontation between Big Government and thousands of small communities.  But when EPA's "little" opponents are recognized as part of a traditional alliance among municipal water and sewer authorities, contractors, manufacturers, and engineering firms, it becomes clear that we have instead a classic brawl over the spoils of power.
     It was not always so.  Before the recent wave of environmentalism, those who appealed for improved water quality encountered a difficult time engaging the interest of the public.  That unique feature of the open market--the profit motive--was missing and its absence meant that there were no private entrepreneurs eager to translate technical facts into information which would motivate consumers.  Would it result in greater profits for a government water authority to clear water sources?  No.  (It does, however, work that way for bottled spring water and beer.)  Instead, government water authorities relied upon rudimentary tests and generalized faith in government, and the enforced lack of competition, to answer
questions about water quality.  Those professionals who labored for improved safety found the public "totally disinterested"9 and the establishment resistant to change.  Then the environmental movement came on the scene.  Those who had worked for improved water within the old system found themselves blamed by latter-day environmentalists for having "allowed" the situation to "deteriorate."l0  Said one such professional about this development:

More than ever before there is a general awareness by the public of environmental pollution.  This should be a good thing because it should lead to public support of pollution control programs.  To date it has not been a good thing.  The environmental con men have stepped in and diverted public attention from the real job to be done.11

* Aerobic and biological recycling systems which re-circulate cleansed flushing fluids back to the toilet tank.

* Mineral oil recycling systems.

* Composting toilets which reduce wastes to five per cent of original volume and produce a useful garden fertilizer about every two years.

* Incinerating toilets.

* Vacuum and pressure systems which "whoosh" wastes to a collection tank. 

Source: Harold H. Leich, "Wanted: A Sewerless Sanitation System," paper given at a conference on sewage and sludge alternatives held by the Association for Rational Environmental Alternatives, May 15, 1977

     What will Libertarians do about local water and sewage?
     * Libertarians will establish freedom of choice among water and
sewer alternatives.  They will seek the immediate repeal of laws compelling hookups with government-operated sewers and water main.  By relinquishing control and withdrawing subsidies, local governments tan place local water and sewer authorities squarely in the realm of private enterprise.  Eminent domain privileges, which subsidize the cost of acquiring rights of way for water and sewer systems, and which inherently violate private property rights, should be relegated to the feudal past.16  Where de-municipalization of water and sewer systems results in income or savings to the local government, these should be passed through directly to the taxpayers.  Finally, Libertarians will bring an end to the regulation (governing rates, service, etc.) of water and sewer companies, and no treatment alternative which respects the rights of neighbors to full use of their property shall be ruled off the market.
     In large cities, the established water and sewer system would seem well-situated to preserve the monopoly it inherits from government operation.  If this is what consumers voluntarily continue to support, then Libertarians say, "So be it."  But to assume that this will be so may be shortsighted. While the enormous obstacles of constructing new water and sewer lines in urbanized areas are altogether obvious, it is precisely in such areas where competing and perhaps differentiated water and sewer systems may enjoy their greatest profit opportunities. In suburban and rural areas, we might well expect to see a different balance struck between use of large, commercial systems and privately-owned water wells and sewage disposal facilities.
     When people are free to choose, we may see the entire concept of water-flushed sewage challenged by new ideas. Markets will be free to develop for alternatives (some of which are listed in Table 1). Even in the face of the subsidized sewer monopoly, private entrepreneurs have gained some acceptance for non-water disposal innovations. Twenty thousand vacuum systems are in use,17 and it is said of one electric composting toilet operating in more than 55,000 homes that household water consumption is halved and that the cost of a small electric coil used to speed composting is less that the cost of the water pumping formerly required.18
     * Libertarians will make property rights the foundation of legal claims to clean water. Libertarians will replace the present willy-nilly regulation of unowned water resources with a legal system which fixes individual titles to water resources and water quality. Since water and sewer systems will function in this context, the nature of this legal foundation is important, even though its complete development will probably occur only in the longer term.
     While the underlying legal theory cannot be fully explored here, a few consequences are worth noting.  First, Libertarian law will not impose uniform, EPA-style standards for water quality.  Based upon individual homesteading of natural resources, Libertarian policy will define specific individual property rights in water.  In most cases, these will depend upon the existing type, quantity, and quality of water that each individual is using (thus no universal standard).  Once these property rights are established and protected, they can be kept, given away, bought, and sold.  Since "discharge titles" can then be traded as property, it become possible under Libertarian legal policy--and only under it--to make secure, profitable investments in cleaning up rivers and shorelines.
     No Libertarian policy will protect anyone from natural events, as when flooding pollutes and alters the course of streams, or when a hot summer lowers the water level in a lake and in its surrounding water
well.  But--in contrast to the present legal free-for-all over wellwater rights--the owners of wells will be able to prevent neighbors from reducing their available water, provided that neighbors are proven responsible.  Stream owners will be able to stop identified polluters who infringe upon their rights to have the water undisturbed.  Water-owners, like landowners, will not be able to do anything which denies others their property rights: be it the right of the person downstream to receive an unimpeded flow, the right of vessels to navigate the water's surface, or the right of a neighbor to not have his water table poisoned by sewage.
     The critical task which this legal method faces with water pollution is to determine the facts of each case: Who owns what? How much? What constitutes an invasion of property? Has this occurred? Such problems, though they demand a technical effort seldom applied to pollution questions today, can at least be solved. It is not, as government officials are sometimes wont to claim, "impossible" to determine responsibility for pollution; technology developed in the last decade makes it possible to match up spilled oil with its source by "chemical fingerprinting," and knowledge of wind and water currents can help a researcher trace the path of a pollutant back to its source.19  In a system which enables people to protect their rights to various uses of water, the incentives would exist to bring such scientific methods to full fruition.
     What does seem unlikely is that any single agency like the Environmental Protection Agency can monitor more than 62,000 point sources of pollution in the United States.  Beyond the practical difficulties of regulation, the government's dilemma is unsolvable; regulation cannot be a just solution. The pattern of rules and subsidies is designed by political expediency, scientific opinion, and public outrage--but nowhere are the actual rights of water-users defined and considered. Sheer politics is even more pervasive when it comes down to enforcement. Explaining why a 1976 General Accounting Office spot check revealed that fully two- thirds of EPA's 45,000 industrial "pollution permits" were being violated, then-EPA Administrator Russell Train said, "We don't have enough manpower to enforce all the statutes everywhere, so we tend to pick out those, situations where our actions will have the most beneficial effect."20 Beneficial?  To whom?  By what standard?
     Some observers have suggested that the government replace pollution regulation with pollution taxes.21  Libertarians strenuously reject this misguided notion.  Private, individual water owners, consulting their own preferences, can set prices for allowing others the privilege to use their water.  But government pricing of the use of private property is unjust and totally arbitrary.  What is the "right" price for pollution? Government can never know.  What will the pollution tax become in government hands?  Another way of allowing politicians to perpetuate and "manage" conflict to their own profit and advantage.
     The situation clearly calls for turning over enforcement of water rights to that much-ignored eager beaver, John Q. Public.  In a word, Libertarians will decentralize the process.  Even now, millions of private land titles, of far greater diversity and complexity than anything with which EPA has dealt, are informally and formally defended against trespass every year.  No massive army of enforcers is needed to apply general "standards;" each landowner knows his individual rights and has the most at stake of anyone in seeing to it that they are protected.  If one landowner wants rights to use another's land, "standards" are relaxed and an amicable bargain is struck.  Everyone goes home happy.  The private property system in land works, and it will work better in a consistent Libertarian legal environment.  So, too, shall it come to pass with water.